Average real ROI for condos/lofts/apt in Atl

[Patrick Young]

Hey guys - I'm starting to get my feet wet in my search for a condo in downtown Atlanta area. Looking in the low 100s and plan to put 20% down.

I'm trying to understand everything that get's factored into ROI, the following assumes $100k purchase price.

• Downpayment - $20,000
• Interest on loan - $5-6k/year need to get amortization calculator
• Taxes/Insurance - $2000/year
• HOA $3600/year
• Maintenance $1000/year

About $12k/year to hold the property - rent in this area doesn't seem to be much more than $1200 optimistically - so looking at making $2600 on $20,000 or around 12%, then subtract taxes off that. Is my math/logic correct? What am I missing? Do I need to factor in opportunity costs for the $20,000 downpayment that I'm no longer investing elsewhere? How do you account for the $/month which goes towards the principle - does this decrease your ROI each month as you have more $ in the property? What is considered a good ROI for a property of this kind?

[Matthew Nicklin]

@Patrick Young If you are investing in condos you need to ensure you understand the condos finances, covenants, rules, and regulations. A lot of condominiums have rental restrictions. A lot of condos are run poorly and are mismanaged leading to high HOA dues or special assessments. It is important to request the HOA Financials, covenants, rules, and regulations in your due diligence period.

The 12% number you mention above is considered your cash on cash return. There are several factors to consider when purchasing a rental; Cap rate, cash on cash, potential for equity appreciation, etc.